Fighting the Fakers: Challenges of Product Authentication in the Retail Industry

Counterfeit goods—illegitimately made or adulterated consumer goods—are the bane of the luxury goods marketplace. By some estimates, the business of trading in fakes is worth about a quarter of the global annual luxury goods industry.

About 40 percent of counterfeit sales happen online as manufacturers of fake products leverage the anonymity of the web to push their agenda. For every e-commerce retailer that cracks down on fraudulent practices, there’s a new one waiting in the wings to take its place. It’s an endless game of whack-a-mole with far-reaching implications for the brand, both from a financial and a public relations standpoint.

Over the past 20 years, the market for counterfeit luxury goods has grown exponentially, putting millions of jobs at risk and draining trillions from the world economy. In 2016 alone, 20 percent of Instagram posts about luxury brands actually contained fake products, most of them so good that they are virtually impossible to detect, at least, to the untrained eye.

Making a Case for Provenance

Legally, brands can protect their logo, their designs, their trademarks. However, physical products are a different story altogether.

When faced with the reality of a counterfeit purchase, consumers tend to blame both the retailers and the manufacturers. Still, neither faction is accurately measuring the impact it has on the brand or their business as a whole.

In the effort to reignite confidence in the online luxury shopping experience, brands have gone to great lengths, not only to educate consumers but also to authenticate their products so that there is no question as to their provenance.

The question is, is it working?

How Brands Can Win a Losing Battle

Global luxury brands have invested heavily in solutions and strategies to authenticate their products. They continue to lobby governments to prosecute buyers and sellers of counterfeit goods and to block access to sites that trade in fakes. Top brands like LVMH spend tens of millions of dollars every year, employing more than 60 attorneys whose full-time job is to fight the trade in fakes. In spite of all this effort, they still face an uphill battle.

A solution is long overdue, one that adequately protects brands and products at the item level. The trouble is, many of the solutions available are not secure or financially viable enough to make sense in the long run.

The right solution would expose counterfeits and educate consumers as to the cost of counterfeiting while authenticating each product individually and on-demand.

Authentication at the Item Level

Implementing near-field communication (NFC) tags at the item level is a cost-effective and secure solution that establishes universal authentication – one that anyone can access, anytime, anywhere.

NFC tags are attached to each product and are uniquely embedded with various details about the item. Upon access, the user is sent a verification with images and a list of attributes specific to the product. If the code does not authenticate, the user is notified immediately, as is the brand, who can respond accordingly.

Using blockchain technology, these attributes are held in the cloud and can be referenced at every point in the supply chain, ensuring authenticity and eliminating counterfeits. Tags can be placed beneath existing logos or brand labels for ease of access.

To learn more about item chain authentication and how it can help your brand, reach out today.